70% of U.S. Government Spending Is Writing Checks To Individuals

An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.

Comments

And...

[beelsebob]

Why is this a problem? You've outlined some interesting results here, but what makes you think there's an issue here?

Re:And...

[Above]

Here's a fun fact the right doesn't often talk about. I've spoken to a number of actual illegals over the years about how much they fear being captured. Several of them appear to have what are "above board" jobs, having gotten identification numbers on a temporary work via and then continued to use them, or on various other methods. They overstayed, and are now illegal.

The general response was interesting. INS doesn't have enough resources to do anything unless you're a felon. Even getting arrested for a misdemeanor is unlikely to get INS involved unless your in a few border areas. They really didn't fear INS at all. However, each said they very carefully paid their taxes to the IRS each year, often omitting some questionable deductions to which they might be entitled. Why? The IRS will audit them. And while the IRS is forbidden by law to share information with other federal agencies so a return won't get you arrested, if the IRS choses to arrest you then you're in the federal system, automatically handed over to INS, and deported in short order.

The result is in fact many illegals pay taxes, but are not entitled to receive many of the benefits that other tax payers could receive. They are in fact the opposite of takers, but are rather over contributors.

I wish I had a citation, but I don't.

Re:Makers and takers

[blue trane]

What if the checks are only taking money from the Fed, which creates it out of thin air anyway, and is required to return all interest on T-bills to the Treasury? No harm.

Lincoln realized that government's greatest potential lay in its ability to create money, and created over $400 million greenbacks to raise revenue without increasing taxes or borrowing it.. The Greenback Party of the 1870s, made up mostly of poor farmers who were being hurt by the deflation of trying to take those greenbacks out of circulation and go back on the gold standard, were ahead of their time in recognizing that government can and should create money to help individuals.

Re:Better summary

[Anonymous Coward]

Medicare, Medicaid and "Obamacare" - the money eventually ends up in the hands of private health care providers funneled through more and more private health insurance companies, so we could rightly call this corporate welfare.

Social Security - This program is entirely self-supported by taxes specifically earmarked for Social Security (FICA). Guess what? Every year, there is a surplus. The treasury then converts this surplus into T-bills, and the surplus is then used to offset the deficit in the general fund. This means that close to 20% of the National Debt is owed to the Social Security Trust Fund. What will cause Social Security to become insolvent is when the program has to draw more than it bring in each year, causing those IOU notes to come due.

Poverty programs - This is actually corporate welfare in disguise when you consider that the majority of the funds go out to people who can be classified as "working poor" - people who work for companies that do not pay a living wage, thus forcing the worker to fall back on the public safety net to afford luxuries like food, clothing and shelter. The employer who has a worker applying for any of these programs should have to pay an additional tax to offset this imbalance. Maybe then the employer might consider actually paying their employees a living wage.

Veteran's pensions - As a third generation military brat, and someone who has lost family in WWI, WWII, Korea, Vietnam, Desert Shield, Desert Storm, Irag and Afghanistan, (and personally served in both Iraq and Afghanistan) all I can say is that veterans earned their pensions each and every time they reported for duty. 'Nuff said.

what is it with leftists

[prof_robinson]

Leftists always gloss over the details. Yes, the house controls the spending. They "control the purse" as the saying goes. But just like the Left conveniently forgets that it was the GOP house that balanced the budget, and they forget it was the Democrat congress that spent all the increased revenue from Reagan's tax cuts, they also forget that we are currently locked into 2009 spending because the democrats in the senate refuse to pass any budget submitted by the GOP house. Using this situation to blame the GOP is just being ignorant of the facts.

Re:Makers and takers

[PRMan]

Because long-term capital gains are taxed at zero if you make nothing. Have billions in investments? Take a $1 salary and you can take out $1 million per year for free.